Sterling- stable start to 2012

Published: 03 January, 2012

Sterling has started the new year much where it left off, hovering just under €1.20/£1 against the euro and at $1.5570/£1 against the US dollar.

Smart currency rates & comments - January 3.

EURO/GBP - 1.1972

US$/GBP - 1.5570

CHF/GBP - 1.4607

CAN$/GBP - 1.5796
AUS$/GBP - 1.5118
ZAR/GBP - 12.5722
JPY/GBP - 119.61
HKD/GBP - 12.1065

NZD/GBP - 1.9823

SEK/GBP - 10.6932

AED/GBP - 5.723

US$/EURO - 1.2984

INR/GBP - 82.02

Volatility is expected to increase again, as traders return to work after a relatively quiet week. As we start 2012, many analysts expect sterling to strengthen against the euro as the debt crisis worsens. Against the US dollar, some feel that sterling will fall as investors move money into the safe haven currency, but others feel that there is scope for sterling to strengthen as the US government struggles to deal with its deficit and continues to bicker over budgets and spending.

In the euro zone, the euro suffered throughout December, dropping to an 11 ½ month low against sterling in the last week of the year. 'Shorts' of the euro - i.e. trades betting that the euro will fall - have increased to record highs in recent weeks and Europe is set to remain as the market focus for the coming months. This week sees bond market auctions in Germany and France which will most likely draw some attention alongside German unemployment figures later today.

In the USA, key events this week include the minutes from the most recent Federal Reserve interest rate meeting that are released today. With more buoyant data coming out of the USA, the minutes might show that the committee are feeling more positive about the US recovery.

Elsewhere, the Danish krone has begun to show signs of safe haven demand as the euro zone crisis has deepened. The Scandinavian currencies could potentially start to strengthen against others as they are not as embroiled in the credit crisis as many other countries.

Supplied by Nick Ryder of Smart Currency Exchange, the currency partner to Harpers Wine and Spirit who have teamed up with Smart to provide readers with a free bespoke currency service. Go to www.smartcurrencybusiness.com/winespirit for more information or call on 0207 898 0500.

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